The lead counsel to the inquiry appears to have suggested that a possible answer to the problem of online libel is the "imaginative solution" of bringing ISPs "within the scope of 'publishers' for the purposes of the law of defamation" and putting ISPs under a duty to ensure that they do not enable their customers to access defamatory content. Not surprisingly, that suggestion has received something of a backlash from internet enthusiasts.

I can only assume that Jay was not really intending to suggest that all internet intermediaries should be liable for the defamatory material that third parties post on their websites and platforms. Such a law would not only be a serious step back for online development but would be totally unworkable in practice.

The term "ISP" is an acronym that is used too often without a great deal of thought as to what it actually means. It is used most commonly in the internet industry to describe an internet access provider such as Sky Broadband, but it is also used loosely to describe other types of internet intermediary, including hosting providers like Demon Internet, platforms such as Facebook and Blogger.com, and even search engines such as Google.

However, for the purposes of defamation law these intermediaries do not all fulfil the same functions and so cannot be lumped together in the same basket, as Jay seems to have done.

That is why the law currently classifies internet access providers and other so-called "mere conduits" as non-publishers, but in certain circumstances recognises that other internet intermediaries (including website operators) can be classified as publishers if they are notified of libellous material being published through their servers or websites but fail to do anything about it.

It is also why European legislators considered over 10 years ago that some internet intermediaries (or "information society service providers" as they are confusingly called in the E-Commerce Directive 2000) considered these issues carefully and decided that some but not all internet intermediaries deserved immunity from legal action in respect of third party content. This is in marked contrast to the position in the US, where all internet intermediaries are virtually immune from being sued for damages for defamation.

But despite clear legislative defences for internet companies in the UK, drawing the line between publishers and non-publishers has not been easy for our judges. Back in 1999, Demon Internet were held liable for defamatory statements on a discussion forum which it hosted after it was notified of the material but failed to remove it for 12 days (although it was only liable for the damage caused in the 12 day period). That case has since given rise to the unwelcome practice of internet intermediaries simply removing material upon complaint without a great deal of scrutiny, causing a chilling effect on freedom of expression.

However, other recent cases have gone the other way and offered more protection for internet intermediaries. In particular, Google has successfully defended recent claims for defamation both as the owner of a search engine and the operator of Blogger.com, even having not taken immediate action after being notified of the relevant defamatory material. We are currently waiting for the court of appeal to decide whether it agrees with one of those decisions in the case of Tamiz v Google. When that judgment is published, there will hopefully be a detailed exposition of the circumstances in which internet intermediaries become publishers for the purposes of defamation and matters will be much clearer.

This issue was also debated at length by the House of Lords last week in the context of the defamation bill. Clause 5 aims to provide a new defence to website operators and encourage complainants and the internet users responsible for posting defamatory material to resolve their differences where possible without putting website operators in the impossible position of judge and jury.

Their Lordships quickly realised that this area of the law is all about balance between the protection of reputation and freedom of expression: Of course Lord McAlpine should be able to write to Twitter and expect seriously false allegations of paedophilia to be removed quickly, as in fact happened. But that does not mean that website operators, search engines, hosting providers, and internet platforms should be diverting resources away from innovation in order to employ armies of libel lawyers to deal with libel complaints or simply removing material upon complaint for fear of legal liability. Google may be able to afford that but I doubt Mumsnet can.

What is needed is a quick, easy, and cost-effective online dispute resolution process to deal at an early stage with the borderline libel complaints where website operators receive a take-down request but can't quite tell whether the complaint is legitimate or simply a company or individual chancing its arm to stifle legitimate criticism. Such a process, which does not currently exist, should be available both to large internet intermediaries and the many small-time bloggers who also receive defamation threats.

And so while Jay is correct that "increasingly imaginative solutions" are necessary to deal with this problem, he can take comfort that there are currently plenty of lawyers, politicians and peers looking at these issues in great detail. Hopefully, he will therefore hold fire on developing his proposals for ISP liability until these avenues have been fully explored.